Shenzhen Kingsun Science & TechnologyLtd (SZSE:300235) Will Pay A Larger Dividend Than Last Year At CN¥0.0502

Shenzhen Kingsun Science & Technology Co.,Ltd's (SZSE:300235) dividend will be increasing from last year's payment of the same period to CN¥0.0502 on 10th of May. Even though the dividend went up, the yield is still quite low at only 0.5%.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Shenzhen Kingsun Science & TechnologyLtd's stock price has increased by 33% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

View our latest analysis for Shenzhen Kingsun Science & TechnologyLtd

Shenzhen Kingsun Science & TechnologyLtd's Earnings Easily Cover The Distributions

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. The last dividend was quite easily covered by Shenzhen Kingsun Science & TechnologyLtd's earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

Over the next year, EPS could expand by 14.8% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 35% by next year, which is in a pretty sustainable range.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2014, the dividend has gone from CN¥0.0222 total annually to CN¥0.0502. This implies that the company grew its distributions at a yearly rate of about 8.5% over that duration. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Shenzhen Kingsun Science & TechnologyLtd might have put its house in order since then, but we remain cautious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Shenzhen Kingsun Science & TechnologyLtd has impressed us by growing EPS at 15% per year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

We Really Like Shenzhen Kingsun Science & TechnologyLtd's Dividend

Overall, a dividend increase is always good, and we think that Shenzhen Kingsun Science & TechnologyLtd is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 2 warning signs for Shenzhen Kingsun Science & TechnologyLtd that investors should know about before committing capital to this stock. Is Shenzhen Kingsun Science & TechnologyLtd not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.